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In an effort to re-create the glory days of United Artists, parent company MGM said Thursday that the one-time artist-run studio will be reborn under the leadership of Tom Cruise and his producing partner Paula Wagner.

Cruise and Wagner, whose longtime production deal at Paramount Pictures ended in August, have taken what is being called a "substantial minority financial stake" in UA, founded more than 85 years ago by movie greats Douglas Fairbanks, Charlie Chaplin, Mary Pickford and D.W. Griffith. Cruise and Wagner will set the company's production slate. They also will have greenlight authority within an undisclosed range; though the principals declined comment, sources suggest that number is $50 million-$60 million. Wagner will serve as CEO, and Cruise will star in and produce films for UA, though he will remain available to do film projects for other studios.

"You've got the studios accusing talent of driving up the cost of doing business and the talent accusing the studios of being political bureaucracies," MGM chairman and CEO Harry Sloan said. "We think if we can create a talent-friendly studio, owned by artists, then we can come up with a new financial model."

UA will have a production slate of about four films a year, with MGM handling worldwide marketing and distribution. The films will be fully financed by MGM and its partners, including private-equity firms Providence Equity Partners and Texas Pacific Group along with industry partners Comcast Corp. and Sony Corp. of America. Cruise and Wagner will not be the sole suppliers of material at UA but will bring in other creative talent.

MGM hopes that once the studio's initial films are announced and UA's business model becomes clear, UA will be able to attract outside funding from Wall Street. "We're going to fund it to begin with, but we want to create a scenario where UA stands on its own, with its own credit lines, (its) own investors, so that it can grow into a studio that can produce more than four movies a year," Sloan said.

The parties involved said the deal came together during the past few months, as Sloan and MGM chief operating officer Rick Sands were deciding what to do with the UA brand. C/W Prods. had just left Paramount, where its long-term production deal wasn't renewed after Viacom chairman Sumner Redstone criticized Cruise's behavior.

While critics pointed to Cruise as an example of a star whose rich backend deals have driven up costs in Hollywood, the actor-producer now shifts into a role within the studio system where he will have an interest in ensuring the profitability of a company.

"Tom is going to be as supportive of UA as he can," his longtime attorney Bert Fields said. "Cruise/Wagner Prods. contributed a massive amount of money to Paramount's market share that is now going to be elsewhere, with a lot of it going to UA."

The new UA is expected to announce its first project soon. It will focus on movies that are commercial in nature. "They have complete greenlight authority up to a very high point, higher than most I've seen," Fields said.

"We intend to make similar pictures to those we've done at C/W, but now we have the opportunity to broaden our base, to make more pictures and to continue to make pictures that appeal to broad audiences," Wagner said. "We'll be making high-concept films, character-driven films, a wide-range of films."

Since C/W Prods. began in 1993, the company produced films as varied as "War of the Worlds," "The Last Samurai," "The Others" and "Vanilla Sky." It has generated worldwide boxoffice grosses in excess of $2.9 billion. Once C/W split from Paramount, the duo secured a development and overhead deal with investment firm First and Goal, headed by Washington Redskins owner Daniel Snyder. That deal remains separate from UA and will be used for any independently produced C/W projects.

The UA deal is a coup for MGM, which has been undergoing a rebirth since October 2005, when its lead investor Providence Equity Partners hired Sloan to pull the company out from under Sony Pictures' control. Since that time, the Century City-based studio hired veteran distribution executive Sands, who in turn has signed distribution deals with such indie companies as the Weinstein Co., Sidney Kimmel Entertainment and Bauer Martinez, among others. But those deals have only used MGM's domestic distribution operations.

"We'll be able to feed our worldwide distribution and marketing system throughout all our media," Sands said. "And we'll be partnering with extremely creative minds. It's what UA is all about."

Cruise teamed with UA in 1988 for "Rain Man," which won four Academy Awards including best picture. C/W has not worked with the studio. The deal will mark the first time Wagner takes an executive role, having spent her career first as an actress, then an agent, then a producer.

"I think I've naturally evolved to this place," Wagner said. "Both Tom and I are looking forward to really jumping in and continuing to involve ourselves with the business and creative community we work with."

Cruise will be as involved in the company as he was with C/W. While Wagner would like Cruise to star in one of the first four pictures the duo makes at UA, its not clear yet if that will happen.

The agreement between C/W Prods. and MGM/UA, which takes effect immediately, was brokered by CAA and Fields.